INTER CONNECT

CLEARING HOUSE

WASPAG’s Standpoint

INTRODUCTION

Wireless Application Service Providers’ Association of Ghana (WASPAG) is an independent,

non-profit, self-regulatory organization with a remit to represent wireless application

service providers (WASPs) interchangeably referred to as value added services providers

(VASPs). The Association aims to provide a neutral forum for members to address issues of

common interest and interact with industry stakeholders, network operators and

government bodies.

WASPAG Objectives are to

Ensure that members of the public use mobile services with confidence, and

assurance that they will be provided with accurate information about all services and

the pricing associated with those services.

Provide a platform for addressing the concerns and complaints of the public relating

to services provided by WASPAG members.

WASPAG operates by a Code of Business Conduct and Business Ethics, endorsed by the NCA,

which all members are bound to and aims to ensure that end-users receive world-class

services whiles ensuring industry participants earn a fair return on their investments.

The association was officially founded in December 2012 with a membership of six WASPS.

• Responsibility

• Accountability

• Growth

• Transparency

• Collaboration

• Trust/ Transparency

• Education

• Customer care

• Accountability

• Convenience

• Convenience

• Collaboration

• Reliability

• Value

• Reputation

• Sustainability

• Convenience

• Reliability

• Efficiency

• Authenticity

• Transparency

• Value

• Accountability

• Reputation Networks Regulator

IndustryCustomer

Reference to an NCA press release in graphiconline ,the NCA will establish an interconnect clearing house by the mid 2015.

The clearing house is expected to provide a common, independent mechanism for the billing and settlement of interconnect accounting traffic for all the existing and future telecom operators in the country.

It will also, among other things, take over all the functions relating to the preparation of billing information, reconciliation reports and the reconciliation process itself within one of the country’s most vibrant and competitive industries.

THE INTERCONNECT CLEARING HOUSE

The NCA indicate that there have been many issues relating to auditing of the charges and reiterates that the clearing house will prevent the occurrence of such problems and ensure greater transparency.

The clearing house will take advantage of the opportunities of a centralised national platform in addressing other industry challenges such as the lack of technical redress to the issues of stolen phones, uncertain subscriber identity, traffic volume monitoring as well as facilitate connectivity to other platforms.

The clearing house could lead to a reduction of up to 40 per cent in the interconnect charges, a move that would also impact on the tariffs paid by consumers in the country.

The NCA has stated that there will also be a lower cost of setup for new service providers.

RATIONALE FOR INTERCONNECT CLEARING HOUSE

We believe that the NCA is making efforts to improve the regulatory framework of the industry and to ensure that Ghanaian companies are able to participate in telecommunications on a fair and even playing field

To this end we applaud their efforts. However, we believe that an early engagement with WASPAG would have provided insight into the challenges faced by the Ghanaian companies and the possible interventions that would be far less complicated and much more favourable to the WASPAG membership

Not having had the opportunity to engage with the NCA till 28th November, 2014, at which point the call for bids had already gone out, and also not having received reaction to our concerns and observations, we are doubtful that our views will be factored into the process.

The current offering, as presented by the NCA document, is not inspired by or consistent with the communicated concerns or interests of the local VAS industry

WASPAG POSITION [1/2]

We believe connectivity through the ICH should not be mandatory but should only be used to the extent that a service provider finds value in doing so

If at all, there should be multiple clearinghouses so that service providers who choose to use them have options and the typical benefits of market competition

Inserting a monopoly into an industry that has been so heavily liberalised, leading to the growth we have seen to date, seems to run contrary to both the government and the regulator’s specified aims

Any potential comparison with Porting XS is fleeting at best as in that scenario there was no existing porting service and existing industry operators then funded its creation

WASPAG POSITION [2/2]

Interconnection is the linking of the networks of two or

more service providers, thus enabling the subscribers on

one network to access the subscribers of the other

networks.

An inter connect clearing house is an independent entity

that provides a common platform of inter connectivity for

the exchange of traffic or data amongst multiple telecom

operators in a jurisdiction or locality.

WHAT IS THE ICH?

Value Added Services (VAS) are non traditional telecommunication services beyond the regular voice and fax services.

Examples of these include:

Premium SMS services e.g. News alerts, entertainment services, SMS voting, SMS Look up services,

Premium Voice Services e.g. Voice SMS, Voice Mail, IVR services, Call Centre

Mobile Applications

Unstructured Supplementary Service Data (USSD)

Currently in the Ghanaian Telecommunication landscape, VASP and ISP services are the only segments Ghanaian entrepreneurs participate in.

WHAT ARE VALUE ADDED SERVICES ?

VAS service providers currently have individual commercial agreements

with the separate Telco's which include:

1. Voice and Data Traffic transmission for services offered.

2. Billing

3. Reconciliation

4. Payments

All these are done under a commercial revenue sharing arrangement

after relevant taxes i.e. CST, withholding taxes are deducted.

RELATIONSHIP BETWEEN VASPs & TELCOs

RELATIONSHIP BETWEEN VASPS & TELCOS

VALUE ADDED

SERVICES

PROVIDERS

Regulatory: The regulator considers our relationship with Telco's as solely commercial and thus outside their regulatory control; at variance with comparable regulators e.g. Kenya, South Africa, etc.

Competition: - Telco's concurrently act as platform suppliers to VASPs whilst competing for the same consumer base with similar services.

Revenue Share: – Telco’s unilaterally dictate revenue share regimes for VASPs. Current average Telco share of revenue is 70% though the VASPs solely innovate, implement, and market these revenue generating services.

Other forms of challenges include but are not limited to service implementation delays, arbitrary revocation of services, unilateral unsubscription of consumers, payments delays, reconciliation differences etc.

OPERATIONAL CHALLENGES

Reference to Page 14 of public consultation paper on interconnect clearing house from the NCA, the proposed role of the ICH in VAS states:

“Introducing Interconnect clearinghouse would improve the third party value added service provision, mobile aggregation services as well as reduce the issue of non-transparent revenue share agreements which exist between content providers and mobile network operators.

Content providers would have a single point of connection to the other Service Providers for service delivery. It would positively impact the issuance and allocation of short numbers and other special numbering resources which is undergoing development. “

THE PROPOSED ROLE OF ICH IN VAS

Practically, there is no relationship between interconnectivity and Value

Added Services (VAS). This is because VAS has always been an intra

operator / network functionality i.e. VAS is always within a particular

network operator and not trans operator. VAS is offered on targeted

basis, and within the context of non traditional telecommunication

services provision.

Modalities with which VAS services are offered and delivered to

customers of a particular MNO is always intra network or peer to peer.

WHAT IS THE RELATIONSHIP

BETWEEN INTERCONNECT & VAS

The Proposed Role of the ICH seeks to solve the following:

1. Improved third party value added service provision

2. Improved mobile aggregation services

3. Reduce the issue of non-transparent revenue share

agreements.

4. Single point of connection for service delivery.

5. Positively impact the issuance and allocation of short

numbers and other special numbering resources

THE PROPOSED ROLE OF ICH IN VAS

NCA’s Proposal

VALUE ADDED

SERVICES

PROVIDERS

INTERCONNECT CLEARING HOUSE

Improved third party value added service provision

1. Additional bureaucracy arising from the introduction of a new administrative layer with unclear financial or time saving benefits for existing VASPs

2. For new VASPs, the benefits remain unclear as there may still be a requirement to negotiate commercial and implementation terms

3. Introduces a potential catastrophic point of failure – resulting in revenue loss across all operators for VAS

The additional bureaucracy is more likely than not to increase costs and time to deployment of services to the Local VASP and the consumer. This will only serve to further hurt local demand and local content growth agenda.

OUR CONCERNS [1/5]

Improved mobile aggregation services

Inefficient data flow

Inefficient resolution of issues

Increased operational costs

(creation of new links, without

compensation for existing links)

Increased financial risks vis-à-vis reconciliation and payments

OUR CONCERNS [2/5]

The cost of this inefficiency will have

to be borne by the local VASPs which

will further retard the development of Local participation in the

telecommunication sector.

Reduce the issue of non-transparent revenue share agreements

It is unclear whether an interconnect fee for VAS will be introduced to replace current revenue share regime

Risk of overbilling VASP’s using interconnect fees due to differences in successful billing for VAS services at the MNO

Revenue share challenges are not rooted in transparency

There is a great risk of additional revenue audit complexity as instead of a single bilateral discussion, there will likely be 2 or potentially 3 bilateral discussions to address any discrepancy. This risk will lead to delayed income acquisition and threaten the collapse of the local industry. This will be a complete reversal of any local content gains made thus far in the telecommunications industry.

OUR CONCERNS [3/5]

Single point of connection for service delivery

Refer to Slides “OUR CONCERNS” [1/5] & [2/5]

OUR CONCERNS [4/5]

Positively impact the issuance and allocation of short numbers and other special numbering resources

Its unclear if ICH will issue and monitor SNR resources on behalf of NCA

Its unclear the benefits the ICH will deliver here as the NCA SNR initiative already addresses this issue.

SNR’s are used within a network and not across networks

SNR’s are used as identifiers for billing which happens on individual networks. The document doesn’t demonstrate how ICH will play a role in the billing of VAS services via SNR’s

It is unclear the what the benefit of the additional administrative layer will be considering that each MNO still has to implement and authorize the SNR on each individual network.

OUR CONCERNS [5/5]

Regulatory: The NCA could take regulatory control of contracts and service level agreements between MNOs and VASPs

Competition: The Regulator could mandate that MNO’s cannot offer commercial Value Added Services except through a local VASP as is done in several comparable jurisdictions e.g. South Africa

Revenue Share: The Regulator could consider VASPs as mini operators and regulate an interconnect regime or bulk messaging rate for VAS traffic

None of these require the intervention of an ICH but simply the will of the regulator to support Local Content development.

SIMPLE SOLUTIONS TO OUR CHALLENGES

VAS INDUSTRY IN GHANA

WASPAG has a current membership of 27 local Ghanaian VASPs. Within this

membership are 7 of the largest local VASPs. Together WASPAG members serve

about 20 Million Mobile subscribers and employ about 1000 Ghanaians at

middle income wage levels.

However the WASPAG membership receives less than 10% of the total VAS

revenue generated in Ghana. The bulk of the revenue goes to Telco's and foreign

non licensed third parties.

We humbly suggest that any intervention should be focused at enhancing the

growth opportunities for local content via these Ghanaian companies, to create

jobs and wealth for our citizens rather than risk curtailing their success by

introducing additional bureaucracy (time and cost).

THANK YOU.